Correlation Between Barclays Capital and ASHX

Can any of the company-specific risk be diversified away by investing in both Barclays Capital and ASHX at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Barclays Capital and ASHX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barclays Capital and ASHX, you can compare the effects of market volatilities on Barclays Capital and ASHX and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Barclays Capital with a short position of ASHX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays Capital and ASHX.

Diversification Opportunities for Barclays Capital and ASHX

0.0

Correlation Coefficient

Barclays Capital  ASHX

Pay attention - limited upside

The 3 months correlation between Barclays and ASHX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and ASHX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASHX and Barclays Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Barclays Capital are associated (or correlated) with ASHX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASHX has no effect on the direction of Barclays Capital i.e., Barclays Capital and ASHX go up and down completely randomly.

Pair Corralation between Barclays Capital and ASHX

If you would invest (100.00) in ASHX on December 27, 2024 and sell it today you would earn a total of  100.00  from holding ASHX or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Barclays Capital  vs.  ASHX

Barclays Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Barclays Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ASHX

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASHX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, ASHX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barclays Capital and ASHX

The main advantage of trading using opposite Barclays Capital and ASHX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays Capital position performs unexpectedly, ASHX can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ASHX will offset losses from the drop in ASHX's long position.

The idea behind Barclays Capital and ASHX pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.